Peru Consumer Electronics Report Q2 2016
BMI View: After a contraction of the consumer electronics devices market in both 2015 and 2016 weenvisage a return to growth over the medium term as Peruvian purchasing power increases, which isexpected to deepen the market and help alleviate price sensitivity. This trend of households moving up theincome scale will both deepen the market as Peruvians acquire sufficient disposable income for first-timedevice purchases, and present vendors the opportunity to generate wider margins as the middle-classexpands. Our forecast for a device spending CAGR of 5.0% 2016-2020 is in contrast to the short-termoutlook, with another year of contraction forecast for 2016, albeit with market conditions expected to beless challenging than 2015 when depreciation against the US dollar negatively affected demand through theerosion of purchasing power ie affordability of imported devices, which resulted in deferred purchases andheightened price sensitivity. While the overall outlook is strong, downside risk is elevated as Peru isexposed to a potential hard landing in China, though the latter is not currently our core scenario.
Latest Updates & Industry Developments
Computer Hardware Sales: USD758mn in 2016 to USD1.12bn in 2020, CAGR of +6.1% in US dollarterms. After contraction in 2016 the market will experience strong growth as incomes rise, with an addedboost from deferred spending in 2015 and 2016.
AV Sales: USD905mn in 2016 to USD1.16bn in 2020, CAGR of +4.1%. Rising incomes will benefit AVdemand, but we envisage it being the underperforming segment as digital camera volume cannibalisationby smartphones will continue to be a drag on spending.
Handset Sales: USD1.09bn in 2016 to USD1.32bn in 2020, CAGR of +4.9%. Growth will remainrobust, but decelerate over the medium term as smartphone upgrade momentum cools as the pool of firsttime buyers diminishes and becomes more concentrated among low-income consumer groups.
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